Q2 Results: Abrupt Project Closure, Seasonality Hurt Earnings, Says Persistent Systems
Persistent Systems Ltd. said a one-off project closure in the digital business affected its performance in the quarter ended September even as shares of the software services providers plunged the most today.
“Digital growth went down because a particular project, worth couple of millions [of dollars], closed abruptly in the second half of September,” Founder-Chairman and Managing Director Anand Deshpande said in an interaction with BloombergQuint. “It (the closure) had to do with the changes in the thinking where the product needs to go and our ability to deliver on that changed requirement.”
Also, seasonality factors usually seen in the second and fourth quarters of the financial year dragged the numbers further down, he said. Some businesses scheduled to be executed abroad are moving to India, he said, adding that will improve the management control and profitability in the second half of the financial year.
The company has an exposure of Rs 43 crore to the Infrastructure Leasing & Financial Services Ltd. group and the next interest payment is expected to be received in the March quarter.
- Revenue up 0.2 percent quarter-on-quarter at Rs 835.5 crore
- EBIT up 3.7 percent at Rs 103.4 crore.
- EBIT margin up at 12.4 percent versus 11.9 percent
- Net profit up 0.9 percent at Rs 88.1 crore.
The stock slumped nearly 18.9 percent, its biggest intraday drop since listing, to Rs 536 per share.